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China Stock Market Freezing Up as Sell-Off Gathers Pace, With 7% Losses,

July 8, 2015 

 

 

Hong Kong stocks close down 5.84 percent, tracking mainland losses

Editor: Mengjie

HONG KONG, July 8, 2015 (Xinhua) --

Hong Kong stocks lost 1,458.75 points, or 5.84 percent to close at 23,516.56 points on Wednesday, led by losses on mainland markets and panic selling.

The benchmark Hang Seng Index opened lower, plunging over 4.7 percent at the start of the morning session. The decline widened in the afternoon, with the index once shed about 2,000, the biggest single day drop in history, touching 22,836.82 points, the lowest of the day. Turnover totaled 235.97 billion HK dollars ( about 30.44 billion U.S. dollars).

Core Pacific-Yamaichi's head of research Castor Pang said that the main reason of the decline was that Hong Kong and Shanghai have high correlation with many mainland companies listed in both places, according to Radio Television Hong Kong.

Hong Kong Exchanges and Clearing chairman Chow Chung-kong told the media that the bourse operator has no intention to intervene the market and will keep an eye on it to make sure it is operating orderly under the risk management control.

The Hang Seng China Enterprises Index moved down 720 points, or 6.09 percent, to close at 11,107.30 points.

All of the four sub-indices lost ground. The Finance sub-index fell the most at 5.94 percent, followed by the Commerce & Industry at 5.9, the Properties at 6.15 percent, the Utilities at 3.49 percent.

Banking giant HSBC, which accounts for the largest weighting of the Hang Seng Index, lost 3.94 percent to 65.75 HK dollars.

Bank of East Asia, one of the largest local banks in Hong Kong, slumped 6.34 percent to close at 30.9 HK dollars.

Local bourse operator HKEX plunged 8.37 percent to 203.4 HK dollars.

China Mobile, China's dominant mobile carrier, lost 6.05 percent to 89.95 HK dollars. China Unicom, another Chinese telecom giant, dropped 8.92 percent to 10 HK dollars.

Local property stocks closed slumped. Sun Hung Kai, one of Hong Kong's largest property developer by market value, shed 5.81 percent to 115.1 HK dollars. Henderson Land decreased 4.39 percent to 49 HK dollars. CKH Holdings fell 4.36 percent to 105 HK dollars.

Mainland-based financial stocks tumbled. Bank of China lost 6. 68 percent to close at 4.34 HK dollars. China Construction Bank fell 6.02 percent to 6.39 HK dollars. ICBC shed 7.56 percent to 5. 5 HK dollars. Bank of Communication bucked the trend of declining and rose 0.79 percent to 7.6 HK dollars.

As for energy stocks, China's top refiner Sinopec lowered 3.44 percent to 6.16 HK dollars. PetroChina, the country's largest oil and gas producer, decreased 5.23 percent to 7.96 HK dollars. CNOOC dived 8.36 percent to 9.64 HK dollars.

 

China stock market freezing up as sell-off gathers pace|

Reuters, Wed Jul 8, 2015 6:57am EDT

SHANGHAI | By Samuel Shen and Brenda Goh

China's tumbling stock market showed signs of seizing up on Wednesday, as companies scrambled to escape the rout by having their shares suspended and indexes plunged after the securities regulator warned of "panic sentiment" gripping investors.

Beijing, which has struggled for more than a week to bend the market to its will, unveiled yet another battery of measures to arrest the sell-off, and the People's Bank of China said it would step up support to brokerages enlisted to prop up shares.

The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen closed down 6.8 percent, while the Shanghai Composite Index .SSEC dropped 5.9 percent.

With nearly half the market on a trading halt and another round of margin calls forcing leveraged investors to dump whatever shares could find a buyer, blue chips that had been supported by stabilization funds earlier in the week bore the brunt.

"I've never seen this kind of slump before. I don't think anyone has. Liquidity is totally depleted," said Du Changchun, an analyst at Northeast Securities.

"Originally, many wanted to hold blue chips. But since so many small caps are suspended from trading, the only way to reduce risk exposure is to sell blue chips."

More than 30 percent has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that China's market turmoil will destabilize the real economy is now a bigger risk than the crisis in Greece.

"Also, the ripple effect from the market correction has yet to show up," wrote Bank of America Merrill Lynch analysts in a note. "We expect slower growth, poorer corporate earnings, and a higher risk of a financial crisis."

Commodities markets reflected growing concerns about the broader health of the world's second largest economy, with copper prices falling to a six-year low, Shanghai nickel futures sliding by their 5 percent daily limit, and oil falling toward $56 a barrel, near a three month-low.

TRADING HALTS

More than 500 China-listed firms announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300 - 45 percent of the market or roughly $2.4 trillion worth of stock - as companies scuttled to sit out the carnage.

With so many small-cap companies sheltering on the sidelines, the ChiNext growth board .CHINEXTC, which has seen some of the biggest swings in valuations, fell a modest 0.8 percent.

The plunge in China's previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China's top leaders, who are already grappling with slowing growth.

Beijing's interventionist response has also raised questions about its ability to enact the market liberalization steps that are a centerpiece of its economic reform agenda.

China has orchestrated brokerages and fund managers to promise to buy billions of dollars' worth of stocks, helped by a state-backed margin finance company which the central bank pledged on Wednesday to provide sufficient liquidity.

The securities regulator said the Securities Finance Corp had provided 260 billion yuan ($41.8 billion) to 21 brokerages, though that sum is only 40 percent of the amount of leveraged positions that investors have cut since June 18.

RETAIL INVESTORS

Unlike other major stock markets, which are dominated by professional money managers, retail investors account for around 85 percent of China trade, which exacerbates volatility.

"It's uncommon to see so many shares posting consecutive daily limit falls, and the index futures swinging so wildly," said Wang Feng, CEO and founder of hedge fund firm Alpha Squared Capital Co and a former Wall Street trader.

"It's a stampede. And the problem of the market is that all the players move in the same direction, and are too emotional."

A surprise interest-rate cut by the central bank at the end of June, relaxations in margin trading and other "stability measures" have done little to calm investors.

The barrage of official commentary and new support measures continued throughout Wednesday's trading session, without visible effect.

Deng Ge, a spokesman for the China Securities Regulatory Commission, said in remarks posted on its official channel on Weibo, China's version of Twitter, that there had been a big increase in "irrational selling" of stocks.

Government agencies also announced that insurers would be allowed to by more blue chips and urged major shareholders and top executives to buy their own shares.

But the market sell-off has extended beyond the mainland, with Chinese stocks on U.S. exchanges falling as much as 6.1 percent on Tuesday, according to the Bank of New York Mellon index of such securities .BKCN.

Hong Kong's Hang Seng Index .HSI fell 5.8 percent, with shares of Chinese brokerages taking a heavy beating.

"Investors are extremely unimpressed with their sudden conscription into national service, and you can see that in their share prices," said Matthew Smith, a strategist who covers the China financials sector for Macquarie.

(Additional reporting by Pete Sweeney, Kazunori Takada and Adam Jourdan in Shanghai, Shu Zhang and Nicholas Heath in Beijing and Umesh Desai, Saikat Chatterjee and Michelle Chen in Hong Kong; Writing by Alex Richardson; Editing by Will Waterman)

 

 

 

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